Acquisitions and Divestitures

Permian Basin Acquisition

On February 25, 2014, QEP Energy acquired oil and gas properties in the Permian Basin of Texas for an aggregate purchase price of $941.8 million, subject to post-closing purchase price adjustments (the Permian Basin Acquisition). The acquired properties consist of approximately 26,500 net acres of producing and undeveloped oil and gas properties and approximately 270 vertical producing wells in the Permian Basin, which created a new core area of operation for QEP Energy. The acquisition was funded with $50.0 million of restricted cash, $300.0 million from the Company's expanded term loan and the remainder was funded from its revolving credit facility.

The Permian Basin Acquisition meets the definition of a business combination under ASC 805, Business Combinations, as it included significant proved properties. QEP allocated the cost of the Permian Basin Acquisition to assets acquired and liabilities assumed based on fair values as of the acquisition date. Revenues of $114.2 million and net income of $23.1 million were generated from the acquired properties from February 25, 2014, to September 30, 2014, and are included in QEP's Condensed Consolidated Statements of Operations. During the nine months ended September 30, 2014, QEP Energy incurred acquisition-related costs of $0.6 million, which are included in "General and administrative" on the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2014. QEP incurred $1.1 million of debt issuance costs associated with increasing the size of term loan borrowings to fund a portion of the acquisition, which are included in "Other noncurrent assets" on the Condensed Consolidated Balance Sheet as of September 30, 2014.

QEP Energy recorded the Permian Basin Acquisition on its Condensed Consolidated Balance Sheet as of September 30, 2014. The following table presents a summary of the Company's purchase accounting entries:



	As of September 30, 2014
	(in millions)
Consideration:
Total consideration	$	941.8

Amounts recognized for fair value of assets acquired and liabilities assumed:
Proved properties	$	472.1
Unproved properties	480.6
Asset retirement obligations	(9.7		)
Liabilities assumed	(1.2		)
Total fair value	$	941.8

The following unaudited, pro forma results of operations are provided for the nine months ended September 30, 2014, and the three and nine months ended September 30, 2013. Pro forma results are not provided for the three months ended September 30, 2014, because the Permian Basin Acquisition occurred during the first quarter of 2014, and therefore there is no pro forma impact on the third quarter of 2014. These supplemental pro forma results of operations are provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the acquired properties for the period presented, or that may be achieved by such properties in the future. Future results may vary significantly from the results reflected in this pro forma financial information because of future events and transactions, as well as other factors. The pro forma information is based on QEP's consolidated results of operations for the three and nine months ended September 30, 2014 and 2013, the acquired properties' historical results of operations, and estimates of the effect of the transaction on the combined results. The pro forma results of operations have been prepared by adjusting the historical results of QEP to include the historical results of the acquired properties based on information provided by the seller and the impact of the preliminary purchase price allocation. The pro forma results of operations do not include any cost savings or other synergies that may result from the Permian Basin Acquisition or any estimated costs that have been or will be incurred by the Company to integrate the acquired properties.



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2013		2014		2014		2013		2013
	Actual		Pro forma		Actual		Pro forma		Actual		Pro forma
					(in millions, except per share data)
Revenues	$	719.5	$	776.5	$	2,614.7	$	2,640.8	$	2,064.8	$	2,195.4
Net income (loss) attributable to QEP	37.3		54.2		118.5		125.5		211.4		240.4
Earnings per common share attributable to QEP
Basic	$	0.21	$	0.30	$	0.66	$	0.70	$	1.18	$	1.34
Diluted	0.21		0.30		0.66		0.70		1.18		1.34

Divestitures

In June 2014, QEP Energy sold its interests in certain non-core properties in the Midcontinent area and other non-core assets in the Williston Basin for total cash proceeds of $702.3 million, subject to post-closing purchase price adjustments, and recorded a pre-tax loss of $210.4 million on QEP's Statements of Operations and Condensed Consolidated Statement of Operations in "Net loss from asset sales" for the nine months ended September 30, 2014. An additional $28.7 million of consideration is currently being held in escrow related to unresolved title defects.